Law judges tell PSC Fortis deal falls short

Filing says CenHud a better fit

The administrative law judges helping the New York State Public Service Commission make a decision on Fortis' proposed acquisition of Central Hudson Gas & Electric Corp. expressed strong reservations about the deal in a filing made Friday.

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By jessica dinapoli

recordonline.com

By jessica dinapoli

Posted May. 4, 2013 at 2:00 AM

By jessica dinapoli

Posted May. 4, 2013 at 2:00 AM

» Social News

The administrative law judges helping the New York State Public Service Commission make a decision on Fortis' proposed acquisition of Central Hudson Gas & Electric Corp. expressed strong reservations about the deal in a filing made Friday.

The two judges state Central Hudson in its current form would better manage the traditional functions of a utility company. The judges go on to say that Fortis and CH Energy Group, Central Hudson's corporate parent, have done little to defuse the public opposition to the deal.

That "apparent passivity" suggests that the public might be correct in its concerns that a new, foreign owner of Central Hudson might not "appreciate the importance of maintaining customer satisfaction," according to the filing.

Canadian energy federation Fortis announced early last year it planned to acquire CH Energy Group for $1.5 billion, including the assumption of $500 million in debt. Shareholders, who would receive a premium for their stock, signed off on the acquisition last year, as did the Federal Energy Regulatory Commission.

Central Hudson spokesman John Maserjian said in an email that the company is reviewing the recommended decision and developing a response. The utility company maintains that the deal is in the public interest, he said. Fortis earlier this year agreed to provide an additional $30 million in customer benefits after bargaining with the state, bringing the total financial benefits to $50 million.

Supporters of the acquisition recently started filing comments with the PSC, and Central Hudson in the past few weeks launched an ad campaign touting the deal.

But opposition to the deal has been mounting for months. A handful of Ulster County municipalities and residents started speaking out against the deal earlier this year, and opposition has grown since then. Concerns include Fortis not placing a priority on renewable energy or freezing rates for long enough.

Sen. Chuck Schumer, D-N.Y., joined the chorus Friday, holding news conferences criticizing the deal at both Newburgh City Hall and the Ulster County Office Building.

"The one-year rate freeze is a joke," he said.

Central Hudson and Fortis propose a one year-rate freeze, valued at $17 million and extending through July 2014, as a public benefit. But, Schumer said that provision will allow Fortis to immediately start trying to raise rates, because the PSC typically takes a year to approve the hikes.

Central Hudson could have filed a rate plan last year that would have succeeded the one that expires this July, according to the company.

Orange County Legislators Chris Eachus and Roxanne Donnery, a candidate for county executive, both attended the Newburgh news conference and have written a resolution opposing the deal. They expect it to go before the full Legislature next month.

"At a time like this, with the economy, we want to have control of our own utilities," Donnery said.

The administrative law judges add in their report that some of the public would rather give up the deal's proposed monetary benefits than see it move forward. That suggests that requiring more economic benefits, like extending the rate freeze, still might not make the deal palatable to the public.